The Spread of People's Capitalism

IT'S too soon to wheel out the "Solid Gold Cadillac" seen in Hollywood's 1956 film tribute to the neglected, but resourceful, small stockholder. But in France, millions who have never held a share are now playing the stock market.

Until reforms were sponsored by a Socialist government in 1983-84, the French stock market represented a small, relatively closed club for large investors. Large corporations traded shares of each other's stocks. In the 1960s and early '70s, the stock exchange often processed less than 100 trades a day, compared to millions on the New York Stock Exchange.

But the decision by a new conservative government to privatize 14 state-owned companies in 1986 drew some 3.8 million first-time shareholders into the market. In 1993, a second wave of privatizations involving 21 companies attracted an additional 2.5 million new stockholders. Individuals were invited to buy shares at a lower price than institutional investors.

With each successive privatization, the government aimed to draw more individuals into the market. Paribas, one of the first big state banks to privatize, launched its stock issue with television ads welcoming the public to walk through the bank's monumental signature doors into "the world of Paribas." Stumping for the rival bank Suez, also privatizing, actress and perfume poster queen Catherine Deneuve told prospective new shareholders: "This is your chance."

Last November's offering of Renault stock was aggressively marketed to individual investors through savings banks and even the post office under the slogan, "To whom other than you should we confide the future of Renault?"

New French President Jacques Chirac promises a third wave beginning this month. Analysts expect privatizations this year could raise $10 billion for the state and add more individual stockholders.

"The impact of these privatizations has been extremely positive on the French stock exchange," says spokesman Herve de Laitre. Last year, the Paris Stock Exchange hit a record of 22.8 million annual trades. Their value passed $220 billion.